IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i19p12632-d933528.html
   My bibliography  Save this article

Competition or Authorization—Manufacturers’ Choice of Remanufacturing Strategies

Author

Listed:
  • Ying Wu

    (School of Management, Chongqing University of Science and Technology, Chongqing 401331, China)

  • Youwei Li

    (Hull University Business School, University of Hull, Hull HU6 7RX, UK)

Abstract

In the face of the cannibalization of remanufactured products produced by independent remanufacturers (IRs), original equipment manufacturers (OEMs) can produce remanufactured products themselves to compete with independent remanufacturers (IRs), or they can authorize the IRs to cooperate because of their seller reputation. This paper studies the key factors that influence OEMs’ choice of remanufacturing strategies. By establishing three two-stage models and comparing them, the thresholds for OEMs to choose different remanufacturing strategies were obtained. There is also an interesting finding that when the authorization fee is higher than a certain value, even if the remanufactured product poses a competitive threat to the new product, the OEM will help the IR improve their remanufacturing technology to save costs and achieve a win–win situation. With the increase in authorization fees, OEMs’ profits will increase first and then decrease, so it is not always better for OEMs to charge higher authorization fees. Whether it is an authorization or a competitive scenario, the improvement in remanufacturing technology by OEMs can increase the output of remanufactured products, which is conducive to environmental protection.

Suggested Citation

  • Ying Wu & Youwei Li, 2022. "Competition or Authorization—Manufacturers’ Choice of Remanufacturing Strategies," Sustainability, MDPI, vol. 14(19), pages 1-29, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:19:p:12632-:d:933528
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/19/12632/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/19/12632/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Zou, Zong-Bao & Wang, Jian-Jun & Deng, Gui-Shi & Chen, Haozhe, 2016. "Third-party remanufacturing mode selection: Outsourcing or authorization?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 87(C), pages 1-19.
    2. Ravi Subramanian & Ramanath Subramanyam, 2012. "Key Factors in the Market for Remanufactured Products," Manufacturing & Service Operations Management, INFORMS, vol. 14(2), pages 315-326, April.
    3. Geraldo Ferrer & Jayashankar M. Swaminathan, 2006. "Managing New and Remanufactured Products," Management Science, INFORMS, vol. 52(1), pages 15-26, January.
    4. Ferrer, Geraldo & Swaminathan, Jayashankar M., 2010. "Managing new and differentiated remanufactured products," European Journal of Operational Research, Elsevier, vol. 203(2), pages 370-379, June.
    5. Hong, Xianpei & Govindan, Kannan & Xu, Lei & Du, Peng, 2017. "Quantity and collection decisions in a closed-loop supply chain with technology licensing," European Journal of Operational Research, Elsevier, vol. 256(3), pages 820-829.
    6. Zongbao Zou & Fan Wang & Xiaofan Lai & Jingxian Hong, 2019. "How Does Licensing Remanufacturing Affect the Supply Chain Considering Customer Environmental Awareness?," Sustainability, MDPI, vol. 11(7), pages 1-23, March.
    7. Anderson, Simon P. & Ginsburgh, Victor A., 1994. "Price discrimination via second-hand markets," European Economic Review, Elsevier, vol. 38(1), pages 23-44, January.
    8. Atalay Atasu & Miklos Sarvary & Luk N. Van Wassenhove, 2008. "Remanufacturing as a Marketing Strategy," Management Science, INFORMS, vol. 54(10), pages 1731-1746, October.
    9. Charles H. Fine & Evan L. Porteus, 1989. "Dynamic Process Improvement," Operations Research, INFORMS, vol. 37(4), pages 580-591, August.
    10. Laurens G. Debo & L. Beril Toktay & Luk N. Van Wassenhove, 2005. "Market Segmentation and Product Technology Selection for Remanufacturable Products," Management Science, INFORMS, vol. 51(8), pages 1193-1205, August.
    11. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    12. Vishal V. Agrawal & Atalay Atasu & Koert van Ittersum, 2015. "Remanufacturing, Third-Party Competition, and Consumers' Perceived Value of New Products," Management Science, INFORMS, vol. 61(1), pages 60-72, January.
    13. Heese, Hans S. & Cattani, Kyle & Ferrer, Geraldo & Gilland, Wendell & Roth, Aleda V., 2005. "Competitive advantage through take-back of used products," European Journal of Operational Research, Elsevier, vol. 164(1), pages 143-157, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. He, Qidong & Wang, Nengmin & Browning, Tyson R. & Jiang, Bin, 2022. "Competitive collection with convenience-perceived customers," European Journal of Operational Research, Elsevier, vol. 303(1), pages 239-254.
    2. Cheng-Han Wu, 2021. "Production-quality policy for a make-from-stock remanufacturing system," Flexible Services and Manufacturing Journal, Springer, vol. 33(2), pages 425-456, June.
    3. Ma, Peng & Gong, Yeming & Mirchandani, Prakash, 2020. "Trade-in for remanufactured products: Pricing with double reference effects," International Journal of Production Economics, Elsevier, vol. 230(C).
    4. Kleber, Rainer & Quariguasi Frota Neto, João & Reimann, Marc, 2020. "Proprietary parts as a secondary market strategy," European Journal of Operational Research, Elsevier, vol. 283(3), pages 929-941.
    5. Zhou, Qin & Meng, Chao & Yuen, Kum Fai, 2020. "The impact of secondary market competition on refurbishing authorization strategies," International Journal of Production Economics, Elsevier, vol. 228(C).
    6. Qiao, Haike & Su, Qin, 2021. "Distribution channel and licensing strategy choice considering consumer online reviews in a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 151(C).
    7. Zhou, Qin & Meng, Chao & Yuen, Kum Fai, 2021. "Remanufacturing authorization strategy for competition among OEM, authorized remanufacturer, and unauthorized remanufacturer," International Journal of Production Economics, Elsevier, vol. 242(C).
    8. Han, Xiaohua & Yang, Qianxia & Shang, Jennifer & Pu, Xujin, 2017. "Optimal strategies for trade-old-for-remanufactured programs: Receptivity, durability, and subsidy," International Journal of Production Economics, Elsevier, vol. 193(C), pages 602-616.
    9. Huang, Yanting & Wang, Zongjun, 2017. "Information sharing in a closed-loop supply chain with technology licensing," International Journal of Production Economics, Elsevier, vol. 191(C), pages 113-127.
    10. Jin, Minyue & Li, Gendao & Reimann, Marc, 2022. "Team of rivals: How should original equipment manufacturers cooperate with independent remanufacturers via authorisation?," European Journal of Operational Research, Elsevier, vol. 296(3), pages 837-845.
    11. Xiong, Yu & Zhou, Yu & Li, Gendao & Chan, Hing-Kai & Xiong, Zhongkai, 2013. "Don’t forget your supplier when remanufacturing," European Journal of Operational Research, Elsevier, vol. 230(1), pages 15-25.
    12. Wu, Xiaole & Zhou, Yu, 2019. "Buyer-specific versus uniform pricing in a closed-loop supply chain with third-party remanufacturing," European Journal of Operational Research, Elsevier, vol. 273(2), pages 548-560.
    13. Tianqin Shi & Dilip Chhajed & Zhixi Wan & Yunchuan Liu, 2020. "Distribution Channel Choice and Divisional Conflict in Remanufacturing Operations," Production and Operations Management, Production and Operations Management Society, vol. 29(7), pages 1702-1719, July.
    14. Nektarios Oraiopoulos & Mark E. Ferguson & L. Beril Toktay, 2012. "Relicensing as a Secondary Market Strategy," Management Science, INFORMS, vol. 58(5), pages 1022-1037, May.
    15. Liu, Zhuojun & Chen, Jing & Diallo, Claver, 2018. "Optimal production and pricing strategies for a remanufacturing firm," International Journal of Production Economics, Elsevier, vol. 204(C), pages 290-315.
    16. Lijun Meng & Qiang Qiang & Zuqing Huang & Baoyou Zhang & Yuxiang Yang, 2020. "Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer," Sustainability, MDPI, vol. 12(6), pages 1-29, March.
    17. Cetin, Can Baris & Zaccour, Georges, 2023. "Remanufacturing with innovative features: A strategic analysis," European Journal of Operational Research, Elsevier, vol. 310(2), pages 655-669.
    18. Li, Wei & Sun, Hui & Dong, Hao & Gan, Yuqin & Koh, Lenny, 2023. "Outsourcing decision-making in global remanufacturing supply chains: The impact of tax and tariff regulations," European Journal of Operational Research, Elsevier, vol. 304(3), pages 997-1010.
    19. Wang, Nengmin & He, Qidong & Jiang, Bin, 2019. "Hybrid closed-loop supply chains with competition in recycling and product markets," International Journal of Production Economics, Elsevier, vol. 217(C), pages 246-258.
    20. Zu-Jun Ma & Qin Zhou & Ying Dai & Gao-Feng Guan, 2018. "To License or Not to License Remanufacturing Business?," Sustainability, MDPI, vol. 10(2), pages 1-21, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:19:p:12632-:d:933528. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.